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Dr. Tyson Examines His Books

Pediatrician Scott Tyson transforms crying babies into bundles of joy. Keeping the finances healthy for his independent practice, though, can make him want to kick and scream.

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Under the plastic gaze of cartoon characters, pediatrician Dr. Scott Tyson steps into an exam room in one of his South Hills offices, his tall figure slightly rumpled, his booming voice often audible in the hallway. The 49-year-old pediatrician's voice is full of questions for the parents -- mostly just mothers -- waiting with their children: "The appetite's good? He's napping? Toilet training? Does he scribble well? Climbing? Putting a few words together? He brushes his teeth with some help?"

When he's got a patient who can speak for himself, Tyson's voice gets louder still, but gentler -- he is the concerned parent. "When you ride a bike or a scooter, what do you wear? Can you count to 10? Do you draw pretty pictures? Can you print your name yet?"

And then the toughest question: "Do you want to sit on the big table or mommy's lap today?"

Fifty years ago, Tyson's father was asking kids the same questions.

"My father started the practice in 1953," Tyson says, grabbing a brown-bag lunch at his desk between patients. "When I was two, people would ask me what I wanted to be, and I insisted I wanted to be a pediatrician."

By the time he was a senior at Mt. Lebanon High School he was class president. "I'm a terrible people-pleaser," he jokes. But it didn't last forever.

"When I went to medical school I said categorically there was only one field I wouldn't go into" -- pediatrics, of course. His dad was working solo, in an office in Mt. Lebanon's Mitchell's Corners, near where the Border's bookstore sits today. "My father was literally wed to this practice," he says.

At Pitt's medical school, Tyson began training in adult neurology. "It's terribly depressing," he says. "I thought, ‘I can't do this.'"

So pediatrics it was. Still, he had no intention of taking over his father's practice. He did it, he explains without compunction, to save himself. "I was having a lot of problems with drugs and alcohol. My decision was: Do I live or die?"

He lived, and so did his father's one-man business. In Sept. 1984, when his father retired, Tyson bought the practice, he takes pains to emphasize. "He did not give me the practice. It was the right thing to do -- because I was very lost.

"At that time the largest pediatric practice in the area was a three-person practice," he recalls. "I knew that I wanted to build the practice up, because I didn't want to be on call every night."

Tyson took on his first partner in 1985 and purchased his small office building in Mt. Lebanon in 1989. The next year he acquired an Upper St. Clair practice and opened his second office there.

Then everything changed. In the '90s, "managed care" and HMOs seemed to be taking choice away from patients and medical expertise out of the hands of doctors.

It also changed the way doctors were paid. Fifty years ago, Tyson's father gave a child a check-up, diagnosed an illness or performed some medical procedure and the insurance company reimbursed him different amounts, depending on the cost of each specific service.

"Clearly you had doctors abusing the system," Tyson says. "I'm the first to admit it was not a tenable system. Doctors would buy labs and they would refer all their patients to that lab. But what's replaced it is a much worse system."

The critique of HMOs is by now too familiar to everyone: Insurers seemed to get in the way of medical decision-making, and cost-containment seemed suddenly to be a higher medical principle than the Hippocratic oath. Highmark bought up practices to try to cut expenses – a move they found didn't work. Highmark's largest local rival, UPMC, started insurance plans. Managed care pitted doctor against patient, Tyson says. An insurance company saying, "We won't pay for this treatment" was, and continues to be, tantamount to a physician saying, "You can't have this treatment."

Meanwhile, managed care's convoluted rules and payment systems made running his business -- and keeping it his business -- that much harder.

Tyson is struggling to remain one of the last of the mom-and-pop doctor shops in Pittsburgh. His practice is not exactly tiny, with 18,000 patients and 58 employees, including 11 doctors and nearly two-dozen nurses. And he's not exactly practicing in obscurity; he also chairs the pediatrics department at St. Clair Hospital. But more than a decade into the managed-care era, perhaps 90 percent of practices like his have sold out to a corporation.

"Every day I look to where I can cut back expenses. It's crazy. I'm not one of those people who drives around in a fancy car." His Ben Avon home is relatively fancy -- at least the county thinks so, assessing it at more than $300,000 -- but he does drive a Toyota Prius, which goes for about $20,000.

"My point is not ‘Woe is me – I went into medicine to make a lot of money and I'm not,'" Tyson says. "That's not the issue at all." The struggle to stay alive in this business of doctoring is not just about him, he says. "It is literally destroying the health-care industry from the inside out."

It's the business of health care, Tyson says, that's getting between him and his patients today.

"I've had people say, ‘This place is packed. You must be rolling in it,'" he marvels. When patients find out he charges them $5 to fill out a medical form if it's not brought in during a scheduled office visit, he figures they're thinking, "‘What a bastard. What a cheap son of a bitch.' They're paying six-, seven-hundred dollars a month for insurance and they think I'm getting a [big] part of that. People think I'm nickel-and-diming them for the $5, when that $5 may be the only thing I'm getting from that patient."

In the practice's Peters Township office on one typical morning, with the examination rooms filling with moms and kids, not a single patient's mother could recall what their family paid as health insurance premiums. Some said it was "free," but really meant that their husband's employer paid the whole premium. If their husband paid even a portion of their health insurance premium, they couldn't recall how much that was -- it was gone before they could see it.

But they all knew their "co-pay" -- the per-visit fee most insurance companies make you pay each time you enter the doctor's office. At $10 or $20, it bothered very few.

In one exam room, after Tyson steps out, Michelle Cochran of Bethel Park waits with three of her four kids: ages seven, two-and-a-half, and one-and-a-half. They're covered, through her husband's job, by a Highmark insurance plan -- just like 38 percent of Pediatrics South patients. Cochran says the family has "never had a problem" with Highmark's coverage. She sees a pediatrician "once every couple of months -- normally. But actually we've been here three times in one week" -- this week. Paying $30 for doctor's visits in one week certainly didn't keep her from coming. Her only hesitation was the need to drag her whole crew here every time one of them gets sick.

Does she look at her insurance statements -- the "Explanation of Benefits" mailed to her by Highmark after each doctor's visit? EOBs review what the doctor charged, what she already paid as a co-pay, what the insurance company chipped in and what she may still owe. They often conclude: "Your provider [i.e., your doctor] has agreed to accept the amount in the ‘allowable expense' column as payment in full." If she's like most people, she simply made sure it said "Member responsibility...$0" and filed it away.

"I read it the first few times," she says, and shrugs. Would she be surprised to learn that her doctor doesn't always get a check for the full amount listed on the EOB?

"Isn't that what they get?" she says.

Not always, Scott Tyson will tell you. Under many managed-care plans, insurers pay a small, flat fee each month for each patient a practice has -- whether they saw the patient five times a month or not at all. It's called "capitation" -- paying a practice per capita, instead of for each procedure. Four insurance companies currently have capitation deals with Pediatrics South.

The income in some specialties -- pediatrics, for instance -- is seasonal, since kids get sick more often in the winter than in the summer. Insurers sold capitation to pediatricians as a way of gaining a steady cash flow. The challenge was to provide the same medical services for patients while being paid only for the average appointment.

Under Highmark's capitation plans, for instance, Tyson gets the highest monthly payment for newborns and toddlers, since they need 11 appointments in their first two years anyway -- let alone all those visits dictated by illness or nervous first-time parents. He gets the lowest monthly payments for his oldest patients -- five years old and up. Each patient's co-pay amount also affects the monthly payment Tyson gets for their care: The higher a patient's co-pay, the less Tyson gets in "capitation" each month, and vice versa.

Tyson is quick to say that Highmark isn't a particular villain here; it's just the biggest, most commonly used health insurer in Western Pennsylvania (with 60 percent of local insurance business in 2002), so he can't help but focus on its practices. Tyson even participates on a Highmark board, helping recommend best practices for kids with Attention Deficit Disorder. But financially, as Highmark goes, so goes Tyson's future as an independent doctor.

Forty percent of Tyson's patients are covered by capitation, the vast majority of them through Highmark. That 40 percent represents a large amount of annual income for Pediatrics South: $664,000 in 2002, half a million of that from Highmark alone. Highmark's best monthly payment under their two capitated plans -- Keystone Blue and Select Blue -- is $46.44; their lowest is $5.96, according to Tyson's records. There are 40 different payment rates altogether, and the average is $15.51, but of course there is no average patient at Pediatrics South: 2,860 are 1-23 months old, 3,900 are 2-4 years old and 11,240 are 5 and older.

So, you're a businessman. You've agreed to play by the rules above. How much will you make in September?

And hey, don't forget -- Highmark pays you a per-patient bonus (see sidebar: ‘Far More Details …') if your costs are lower than it hoped, and if you hit certain marks for quality. The company pays the bonuses quarterly -- but based on figures they gathered as long as a year before.

Now
how are you going to do this month?

"It appeared to be a good deal, although we were one of the last practices to join," Tyson says of managed care. Besides, Highmark "had a huge chunk of the market, so you didn't have any choice" except to sign on for their capitated plans -- not if you wanted to stay in business.

"But the problem with capitation in pediatrics -- kids go to the doctor all the time," Tyson says. And co-pays -- even $20 co-pays -- make most people feel just fine about going to the doctor at any time.

Not that Tyson wants to stop patients from coming. Wonder out loud whether some patients might come too many times and he objects: "Ask a father whose child is 103 [degrees] whether, because he was in three days ago, he is overusing the system. Ask a mother whose child is having leg pain every night for three months whether eight visits to us, two to the ER, and one to [the] ortho[pedic specialist] is too much. The problem is that you are trying to make a very soft system hard or quantifiable, and I am not sure you would be thrilled with someone doing that for you. Would six visits per year be OK? Five?"

Still, does Pediatrics South track who comes and how often -- just for business purposes?

They do, he allows, "but it becomes somewhat academic" as a way of helping them run their practice efficiently. "There are two populations who use the physician a lot: those who are really ill, and those who think they are ill. Those who are ill take up a huge amount of our time and dollars, such as special-needs children who require many referrals. Those who think they are ill take up a lot too, because they may in fact really be ill on rare occasions, and it is impossible to separate that out over the phone. In an environment of malpractice and media coverage of diseases that are rare as hen's teeth, who knows that the next febrile child is not meningococcemic?"

Serious blood infections like that aside, it's no longer paying Tyson -- in a fiscal sense -- to treat a lot of his patients.

The four Cochran kids, who between them visited Tyson three times in early September, earned Pediatrics South $30 in co-pays. If their particular Highmark plan uses capitation, Tyson will also get September payments of about $36 for the youngest child, $11 for the toddler and $6 each for the two oldest kids (based on their ages and their mom's $10 co-pay), for a total of $89.

Is that enough to pay for the salaries, record keeping and storage, the appointment scheduling, the nurse's work, Tyson's work, the waiting room wear and tear, the vaccine storage, and that fraction of rent, utilities, malpractice insurance, cleaning supplies and everything else involved in those visits? Will it be enough to pay for more September visits, if all Tyson gets is $10 more each time? Or will it be enough if you add in the payments for those months when Tyson doesn't see them? Or can it be enough when you consider that total capitation payments for all these kids has risen only $10 since 1997?

And is that enough money for the doctor to end up with when the average monthly insurance cost per American family -- counting both what the family pays and how much their employer pays -- is $755, according to a report released this month by health-policy research group The Kaiser Family Foundation?

Tyson charges patients $60 per office visit -- or at least that's what he bills their insurance companies. Why? He and Highmark both agree that such a figure is a convenient fiction. That figure, Tyson explains, is "based on who will reimburse you the most...so [that] I maximize my fees. But one insurer pays that." And it's usually not their most frequently used insurer.

Who else pays the full $60? The uninsured, of course, unless Tyson gives them a break. Everyone else -- all the rest of the insurance companies -- pay Tyson less than $60.

So what does it cost Tyson to see each patient?

"You are asking the million-dollar question," he says. It depends, for instance, on whether his practice continues to use a registered nurse (RN) or moves to the cheaper medical assistant (MA) to administer shots, whether it returns to using traditional needles or continues to institute the new safety needles that cost three times as much. In trying to control costs, insurance companies have succeeded in making actual cost irrelevant. Doctors charge what they can get.

Dr. Marc Schneiderman, president of the Allegheny Chapter of the Pennsylvania Academy of Family Physicians, has figured out what it costs him to see patients of all ages at his own Coraopolis practice: $42 on average, he reports.

If that figure's true for Tyson, he lost $37 on the Cochran kids in September.

Tyson's small office space in Peters seems decorated by a Hollywood set designer who knows nothing about the doctor's character -- only that he's a "kid doctor." Apart from a few small art-gallery posters featuring children, the room is decked out in a timeless Drug Company Promotional Giveaway motif, with a bit of Early Bookcase and Late File styles thrown in. But the set designer got the crowded bulletin board just perfect: immunization schedules, a Children's Hospital phone directory, Pennsylvania Reportable Disease list (issued by the state Department of Health), a kid's drawing of one of the doctors and his patient as jack o' lanterns, notices from research studies seeking subjects and the practice's on-call schedule.

No set designer could capture Tyson's concern for the future of health care, or the evident care he takes with his patients.

Most are like the four-month-old infant on her mother's lap in Tyson's Mt. Lebanon office on another September weekday morning.

"How's the baby doing?" Tyson says.

"Great," replies the mother.

"Breastfeeding? Any solids yet? You can, if you want, start with bananas, rice and applesauce. She's sleeping well?"

"If I can get her last feeding after 10 I can get her in [bed]," mom says.

"She's pooping well?"

"No, not especially. She had a 10-day gap between her poops and I called in."

"If you add some fruit that might regulate her stooling. Urinating well? Reaches for objects? Anything you're worried about?"

"She has a blocked tear duct. Nursing told me to massage it regularly."

Tyson tells her to call the ophthalmologist if it persists after the baby is nine months old.

"How did she do with the last vaccinations?"

"No problem," mom says.

"Good. She's due for the same ones today." He moves closer and examines the baby. She's alternately puzzled or off in babyland somewhere. Tyson opens the diaper -- that gets her attention. "I know -- you don't like my face! You don't like my face!" Tyson coos.

Tyson moves back to the desk in the room, looks at the family's files. "I've noticed that you're self-pay."

"I left my job and I was a COBRA" -- the federal program that lets people sign up for insurance after it's been lost -- "but it became too prohibitive. It was going to cost me $1,000 a month for insurance and I said forget it."

"You're not paying insurance, you're paying for everything."

There is a silver lining, he informs her: Children of the uninsured are eligible for free vaccines, thanks to a federal program. Otherwise they'd cost her about $300 today. (See sidebar, 'Antidotal Evidence')

Out in the narrow hallway, pale-blue-coated staffers hold medical forms up for Tyson to examine, like headwaiters showing off the wine. He peers at today's selections. The first kid needs an inhaler refill: no problem. The second, an 8-year-old girl, has her earring backs growing into her ears. Sorry, she'll have to see a surgeon or ENT for that.

He moves aside while another staffer conducts an eye exam using the length of the hallway. Tyson puts down his little black case with otoscope, ophthalmoscope and stethoscope and pauses before another exam room. He washes his hands at a hallway sink for the umpteenth time that morning. Doors are opening and closing, staff are running between rooms -- there are enough comings and goings to populate a decent French farce.

"It's been eight years since I've had a raise!" Nurse Marge Norbutt shouts as she passes. Tyson is the sort of boss staffers are comfortable complaining to, instead of complaining about.

"We don't get cost-of-living increases, so theoretically our salaries are going down," says nurse practitioner Barbara Braman, who has been with Pediatrics South for almost 10 years.

"Not theoretically," Tyson says.

"If it wasn't for the fact that we have a nice group of caring people, I'd look for an alternative," Braman says.

"In primary care, none of us went into it for the money," Tyson opines. "We went into it for the stability."(See sidebar, 'Pediatrics South, By The Numbers')

"If we were in it for the money we'd be businessmen," says the practice's newest physician, Dr. Bruce Hyde. Hyde is one the "strays" Pediatrics South has picked up, Tyson jokes -- a doctor whom managed care's business-first principles pushed out of work at his former practice.

"The entire cost of health care used to be covered until last year" at Pediatrics South, Hyde notes. "Now we pay 30 percent."

If you imagined that doctors and nurses treat their colleagues for free, like barbers giving each other haircuts when the shop is slow, guess again. Like so many businesses, Tyson buys health insurance for his employees. His costs went up 24 percent last year, so he finally asked for an employee contribution.

Upstairs, in a lunch/meeting room among a makeshift collection of chairs (some with holes, at least one missing an arm), an interoffice courier arrives carrying a plastic supermarket hand basket full of mail and every child's dream: those tiny end-of-visit toys.

"We're already talking about, for next year, double-digit increases in [health insurance] premiums," says Mark Marsen, the practice's human resources manager. "But we are not seeing a corresponding increase to the reimbursements we get, or anything close."

It sometimes seems as if doctors want to be compensated for every little thing, but that's the only way they earn their salaries back, Tyson says. The practice had to upgrade computers and install T1 lines to satisfy insurance company requests; doctors have to sign off on each other's work until they're all credentialed by yet another insurer. It all costs money, and none of it is reimbursed.

"What we're going through has forced us to be more business-oriented, which is not a bad thing," Marsen says. "But it is very telling of the change. Do we pay a vaccine bill versus a phone bill? The phone bill eventually gets paid …"

Even cans of soda and bottles of water are no longer free here. A sign on the fridge requests 50 cents for anything quaffed from its interior.

Like many businesses that expand, Tyson is struggling with debt at the moment. When he finishes his appointment with the Cochran kids, he steps a few doors down the hall for another appointment -- with a loan officer from a local financial institution.

Is his practice in trouble for reasons other than capitation? Tyson takes a big breath before he answers. "No," he says. "We're doing OK. On the other hand we're going to have to refinance our debt." To keep his practice running, he recently purchased vaccines on a credit card. "What can I say to people?" he asks -- that he couldn't afford to offer certain immunizations this year? He also owes plenty, $164,000, to the IRS this year; he shows the payment schedule, how far he's come, how far he needs to go.

He had 13 straight profitable quarters -- more than three years -- before the expansion, Tyson says. So his current debt has nothing to do with capitated insurance plans and managed care -- at least not directly.

"If 15 years ago I had done what I did" -- expand his practice to a third office -- "there was such a profitability margin there you could not go wrong. Our margin is so tight now that there is no room for error. That's why practices are cutting overhead, RNs are being replaced by MAs, offices are closing, [practices] are cutting back."

And that's in many practices that aren't independent.

"We've grown by 1,186 patients so far this year. Our visits are up by 12 percent, our charges up by 16 percent, new patients up by 9 percent," he assures. And yet it seems that all those one- and two-digit fees he earns will never add up to enough. It's like a family-owned drugstore trying to persist on penny candy sales when Eckerd has long been eyeing your street corner.

"The insurance companies are a gambling organization," Tyson opines, "saying you'll stay healthy and pay all your premiums or you will lose your arm and bleed to death and we'll get all your premiums anyway."(See sidebar, 'The Health Care Economy, By The Numbers')

Tyson has a solution, of course. He seems never to be without a tiny button pinned to his shirt that says "Physicians for a National Healthcare Program. Health care is a human right."

"My essential belief is that a health care system that has as any part of its premise profit for individuals or systems, based on how much or how little care they provide, is flawed," he says. He proposes adopting the PNHP ideas: a national single-payer health care directed by the government ("Think of Medicare for all"), including open access to doctors and hospitals, full prescription benefits and long-term care, all without premiums or co-pays.

"We have vast numbers of our population that have no coverage, and a huge number of those are children. That is not acceptable. This is literally about life and death for millions of our people." National health care, he believes, "is the only answer. We have tried everything else, in some way, shape or form. If we put it into place and it is a failure, is it any worse than managed care? Does anyone think managed care has worked? If you answer yes...you are either in Congress or with an insurance company, and even they are not doing so well."

Tyson takes one more snap at the biggest dog in the local pack.

"Remember, Highmark doesn't do anything but manipulate money and contract with health-care providers."

Highmark says 90 percent of the premiums it receives go back to doctors as reimbursements. Tyson thinks it ought to be 100 percent.

"Everybody is looking for the smoking gun" when criticizing the insurance industry, Tyson concludes. "The person who had cancer and died because they were denied care." Look instead at his new $5 paperwork charge, the $25 he now asks parents to pony up for previously free student sports physicals -- then at the billions that pass through insurance companies annually. These aren't exactly mom-and-pop insurers.

"It's sickening to charge $5 from [patients]. It sickens us -- but it keeps the doors open."

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